Form 5472 and the other US filings for a foreign-owned company

A US LLC owned by one person who lives abroad often owes no US income tax at all. That leads many founders to assume there's nothing to file. There is, every year, and the penalty for missing it is far larger than any tax the company was likely to owe.

This guide sets out which filings apply to which kind of company, walks through Form 5472 and the pro forma Form 1120 that carries it, and ends with a calendar you can copy.

Which filings apply to your company

What you file depends on how the IRS classifies the company, which depends on how many owners it has and what it elected. The table covers the three setups founders abroad use most.

A single-member LLC is a disregarded entity for income tax, meaning its income is treated as the owner's. Normally that means it files nothing of its own. A rule that took effect for tax years starting in 2017 changed that for LLCs wholly owned by a foreign person. They're treated as a corporation for the limited purpose of Form 5472 reporting, and file it every year with a pro forma Form 1120.^⁠[1]

A multi-member LLC is a partnership unless it elects otherwise, and files Form 1065 by March 15 for a calendar year.^⁠[4] With foreign partners and income connected to a US business, it may also have to withhold tax on their share and file Forms 8804, 8805 and 8813.^⁠[4] That's a return to hand to a CPA.

A C corporation files its own Form 1120 and pays its own tax. If a foreign person owns at least 25% of the vote or value at any time in the year, it's a reporting corporation and attaches Form 5472 for each related party it dealt with.^⁠[1]

Most of this guide is about the first case, because it's the one founders most often get wrong.

What Form 5472 reports

Form 5472 isn't a tax return. It reports transactions between the company and related parties, which for a single-member LLC means mostly its owner. The IRS lists the types in three parts of the form.^⁠[1]

• Part IV covers transactions for money, such as sales, rents, royalties, services, loans and interest.
• Part V is only for foreign-owned disregarded entities. It covers amounts paid or received in forming, dissolving, acquiring or disposing of the entity, including contributions to it and distributions from it.^⁠[1]
• Part VI covers transactions for something other than money, or for less than full value.

Part V is why almost every foreign-owned LLC has to file. If you paid the state's formation fee yourself, sent money from your personal account to the company's bank account, or moved profits from the company to yourself, that's a reportable transaction. A company is only excused when it had no reportable transactions of the types in Parts IV, V and VI.^⁠[1]

Keep a simple ledger through the year of every transfer between you and the company, with the date and amount in US dollars. The form asks for totals, and the IRS expects records that back them up.^⁠[1]

How to fill in the pro forma 1120

The pro forma Form 1120 is a cover sheet, not a full corporate return. The IRS says the only information required is the company's name and address and items B and E on the first page. Write "Foreign-owned U.S. DE" across the top.^⁠[1]

On Form 5472 itself, a few lines confuse first-time filers.

• Part II identifies the 25% foreign shareholder, which is you. It asks for a US identifying number. If you don't have one, the company enters a reference ID number instead.^⁠[1]
• The reference ID is a number the company makes up. It must be alphanumeric, with no spaces or special characters, and at most 50 characters. There's no application to the IRS, and you use the same one every year.^⁠[1]
• The foreign tax number is required for a foreign-owned disregarded entity. Enter the tax number your home country issued you, or "None" if you don't have one.^⁠[1]
• Part III describes the related party you transacted with, again you, even though you're already named in Part II.^⁠[1]

You don't need an ITIN for any of this. Our guide to ITINs for non-US founders covers the cases where you do.

How to send it

A foreign-owned disregarded entity can't file Form 5472 electronically.^⁠[1] It has two options, and doesn't use the mailing addresses in the Form 1120 instructions.^⁠[1]

• Fax the pro forma 1120 and Form 5472 to 855-887-7737, at 300 DPI or higher.
• Mail them to Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112, Attn: PIN Unit, Ogden, UT 84201.

Fax is faster, and an online fax service gives you a dated transmission report, which is the closest thing you'll get to a receipt. Keep it with a copy of what you sent.

When it's due, and how to extend

The pro forma 1120 follows Form 1120's due date, the 15th day of the 4th month after the tax year ends.^⁠[2] The LLC uses its owner's US tax year if the owner has one, or otherwise the calendar year,^⁠[1] so for most founders it's April 15. When the date falls on a weekend or holiday, the next business day counts.^⁠[2]

If you need more time, file Form 7004 by the original due date. Enter the code for Form 1120 in Part I, write "Foreign-owned U.S. DE" across the top, and fax or mail it to the same number or address as the return, not the address in the Form 7004 instructions.^⁠[1] The extension is automatic and runs for 6 months, and the IRS no longer confirms it. You'll only hear back if it's refused.^⁠[3]

The penalty

The penalty for failing to file Form 5472 on time and in the manner the IRS prescribes is $25,000. The same penalty applies for failing to keep the required records, and filing a substantially incomplete form counts as not filing.^⁠[1]

It grows. If the failure continues for more than 90 days after the IRS notifies you, another $25,000 applies for each related party, for each 30-day period, or part of one, that it goes on.^⁠[1]

State filings

The federal filing is only half of it. Your formation state has its own yearly charge, due whether or not the company did any business.

• Delaware LLCs don't file an annual report, but pay an annual tax of $400, due June 1. Paying late adds a $200 penalty and interest of 1.5% a month.^⁠[7]
• Delaware corporations file an annual report and pay franchise tax by March 1. The report fee is $50, and the minimum tax is $175 under the authorized shares method or $400 under the assumed par value capital method.^⁠[6]
• Wyoming LLCs and corporations file an annual report with a license tax of $60 or two-tenths of a mill on the dollar of assets in Wyoming, whichever is greater.^⁠[8]

If you registered the company to do business in another state, that state will usually want its own report too. Our guide to LLC annual reports and fees covers other states.

Two filings people forget

FBAR. A US person, which includes a US LLC or corporation, files an FBAR if it has a financial interest in or signature authority over foreign financial accounts whose combined value went over $10,000 at any point in the year. It's due April 15, with an automatic extension to October 15.^⁠[5] A US company that opens an account in your home country, for example to pay local staff, should check whether it's caught.

Beneficial ownership. Companies formed in the US no longer report beneficial ownership to FinCEN. Our BOI guide explains who still does.

A yearly calendar

For a calendar-year company, the federal dates and Delaware's fall like this. Wyoming's annual report is tied to the month the company was formed instead.

Put each of these in a shared calendar with a reminder two weeks ahead, and note where the records live. For founders working out how the company fits together, our pillar on starting a US company from abroad covers the full setup.

Do it yourself or pay for it

A single-member LLC's Form 5472 is short enough to file yourself once you've done it once. The hard part isn't the form. It's knowing which transactions to report and whether the company has any US tax to pay beyond it, which depends on facts such as US staff, offices or inventory.

Formation services such as doola sell yearly compliance packages that include the 5472 filing, and accounting firms such as Pilot prepare returns for startups that have outgrown doing it themselves. Compare what each package includes against the list above before you pay, and check that it covers the state filing as well as the federal one.

Use a CPA who works with foreign-owned companies when you have a C corporation, a multi-member LLC, US employees or a warehouse, or any year you've missed. The fee is small next to a single $25,000 penalty.